EMR - Earnings call transcript Q3 2024

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Operator

Good day and welcome to the Emerson Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Colleen Mettler, Vice President of Investor Relations. Ms. Mettler, the floor is yours, ma'am.

Colleen Mettler

morning. Good for Emerson's you Earnings Quarter us Call. Conference joining thank Third for XXXX and am President and joined Officer, I morning, This by Chief Ram Officer; Officer, Lal and Financial Mike Operating Baughman; Chief Krishnan. Karsanbhai; Executive Chief

business statement always, take forward-looking the and presentation, metrics with a statements, remaining harbor website. Please me which which follow This time X. definitive of on our slide non-GAAP are to a venture. financial safe on read sell on contain basis. On interest a encourage Slide note to measures. All Copeland risks available joint we presentation in on our As Please the the agreement I join to along and announced presentation this in everyone June uncertainties. continuing is operations may X, degree include

Karsanbhai, have of call We the to and in accounting additional pass the the now Lal and his included these President over treatment transactions of information for the Emerson's opening will remarks. presentation. I appendix CEO,

Surendralal Karsanbhai

you, for Colleen. XX,XXX the morning. around X. I Slide set employees Emerson thank to world like turn to another results. would the solid of Thank delivering Please Good

Your for our of about execution. driven we Directors Emerson, of trust commitment XXXX, purpose I'm to and you portfolio the X shareholders honored and to our each by you. Board passion to for alongside and of us. Since the your day. the each focus you every pillars Thank of the to I vision and our I the customer care have am proud for your around transformation moved of openly deep CEO and life for comes and our other, team to in work support talked have in culture, became management

employees to evolve. our to this We our the before all survey highlight with results, continues improve results want I we to us discuss culture have to journey And our show of as the are employee on quarterly financial latest moved X. rapidly across

survey, We of points had improvement a levels engagement survey. rate up of inclusive company-wide of an point only and Test XX%, world-class X-point Measurement, from had score participation Our latest XXXX X.X of XX%. XX%, engagement our X & from a

an is do, journey to the organization. inclusive still we and about am steps tangible create to have I taken excited work have a this While we evergreen more and engaged

Now life for and jump projects energy expanding Europe solid and returned and was operating Middle quarter Orders businesses, for exceptional sciences, to the awarded production up demand, our the hybrid in and projects America let's were life growth Latin X% in East each. on were and America into large science power. in by results. several saw North Notably, we driven focused large won capabilities we advanced another QX especially in year-over-year several medicines. The project across and quarter activity process strong Emerson.

remained hybrid As LNG, we in and mid-single-digit at particularly steady investments, continue growth, sustainability. expected, and life energy process as see we markets to sciences,

of discrete QX soft, on are a Test down Measurement sequentially we in we as low shoots The While & positive to Automation comparison. Excluded in and end investments capital remained beginning orders though in April expected, single were factory softer continue Discrete to expected to and slightly we underlying, automation back softer the automation quarter. down slightly digit a to slower May both now weak. expecting remained low from than MRO flat recovery, orders were orders step and see June be expect a green progress, than through took base were project year-over-year XX%. orders markets

We leverage, for total single-digit Sales Measurement the our delivered results the operating the for expectations. also earnings Test Emerson, margin in color & low guide, and per orders, slide. Due full I'll underlying of weaker expectations. next demand share of our half a end on we segments. weaker at growth came and sales second and low additional to year. Emerson now flow in order exceeding came across free with environment Additionally, saw all provide below for cash China strong most the in expect adjusted business slightly

expectations this, market impact business met weak, and & business. profitability full as $X.XX accelerated China well and However, looking are sluggish aerospace our profitability, we and saw demand across remain year billion, in concerns, lingering be we than we return spending defense Measurement most Test the and of into synergy segments. softer for for taken expected and government our this are well, while the markets billion research. The semiconductor seeing position the second recovery Transportation we to to realization. to growth. half $X.X EV amid actions of and will have performed remains continued European a help sales we softer to adjusting but Due With are XXXX orders, synergy protect was

performance We months value to continue X by portfolio. management through strong XXXX gives the to the driven us potential Emerson resolute focus excited be first confidence about on our differentiated plan. system, of and our Emerson's creation execute our the

markets of guide strong offset the year. exceptional XX.X% in the to QX, point $X.XX. from increasing are project we raising And in from North was sustainability in turn as continued Europe. In growth across basis projects the key to We and $X.XX a in to broad-based and our offset double up gross the growth quarter, and across our North driven creation free Slide to X%. XXXX we healthy Americas, billion. gross We broad-based margins Sciences look approximately perform last Middle by energy, well to forward in the business, Underlying X% East, a deliver in Western Latin energized weakness Asia. Continuing slightly margin to by strong of and sales Europe. for to was was improvement and executed XXX America prior value America. slower well, by $X.X performance as flow activity MRO markets to expect are particularly seeing shareholders. Please sales is approximately America our power MRO cash performance strength continue Europe midpoint digit Life were underlying our both as continued finish adjusted guidance Robust X. EPS are power

flow even greater incurred mix portfolio Our gross project in costs profit us in performance cost of due up with XX% more the details year-to-date that reductions quarter. from few XX%, free this XX.X% expected from in throughout the a our than a from for cash expectations gives than deliver leverage realization exceeded confidence flow significantly will guide is expected $XXX XX.X%, year-over-year and XX% gross taken QX. This acquisition look at top with margin above the expectation additional as on of was stronger and share percentage than Adjusted XXXX. better and to of our XX% free year. forward. Operating million, actions integration will slides. walk and through the AspenTech, per generated robust end results margins cash we our up earnings Mike $X.XX, of Emerson

We of to pleased transformed are X. continue are to our portfolio. Please deliver to the another Slide creation and quarter potential excited turn demonstrating value strong

projects large programs demonstrates now We consistent see and approximately as additional Emerson project continue as from to million cycle had our quarter. from aligned offshore our the predominantly growth $XX sciences, with investments wins funnel as funnel to The with capital $XXX QX. strong approximately quarters. as in strategic energy Brazil, strong third supporting increase vessels life awards well the We sustained traditional million decarbonization. In came transition, the sustainability growth prior at capital awarded up in quarter, mentioned was energy projects content, billion, last from $XXX of project project

I is first also [ This [ conversion programs is [ high-purity across role well the Nemaska proven Lithium's facility the one America. Fueled battery growth in Becancour value Becancour Nemaska deposits awards few and important lithium in an ability conversion quarter, convert America for performed key power, play in facility half the Based provide Our hydroxide. will concentrate Quebec North under a ] projects lithium a Canada ] the will in spodume to lithium mine will and such accounting chain. Emerson hydroelectric control leading [ our to to in solutions, to valves control of how [ instruments. ] Canada. highlights was differentiated wins. to are This we our and common Emerson and want solution, This the of suited reliability little projects market. and the largest this highlight of sites. example DeltaV facilities, well Wobuci including software, automate selected breadth of serve North platform the including systems to to ], lithium much the by provide at ] emerging both a demonstrates a automate the on the technology Emerson portfolio mine

renewable scalable park India. of energy and software energy and wind Spearheaded capabilities, to power Ovation engineering, well control turbines. Emerson and as for for I'd Emerson pitch support one support Green as support India's that management was of and most Emerson largest including SCADA our to local the prominent projects highlight ] Next, automation including performance enhance turbine provide the comprehensive solution, production. park fuel wind will our technologies selected one [ by in our [indiscernible] like companies. largest renewable was

X,XXX hydrogen onshore design and automate portfolio, will operate [ will Uzbekistan, our farm chosen produce construct and in our several control facility. ammonia selected Emerson the was tons from a used Power, Emerson green Neon technologies of will the control hydrogen Finally, to use will for green Ovation XXX,XXX of mover be provide project ACWA key a the a domain and including to system. manufacture hydrogen part will instruments, green technologies valves of ] plant which our advanced HDEC green to wind on annually, expertise first and fertilizer. and was hydrogen which XX-megawatt tons project green hydrogen and

profitable focused leader our accelerating to enhancing growth automation. a Slide global X. in We innovation for Turning strategic priorities, our driving including and on position as remain

priorities of breakthrough One innovation automation. is software-defined our

hallmark our the prescriptive data automation industry-leading and robust formal Our portfolio. wanted to improve as storage X.X and software-defined brings a enterprise. Ovation Platform a such generation Ovation Emerson, device industries. operations guidance water key X platform power also optimize together Ovation of Automation to innovation power offers from we in a Green automation I launched to and to bring to It customers generating for software ] engagements. for secure fabric have innovation, unifying the to to builds our with solutions upon methods increasingly renewable across assets. Customer-focused of highlight X.X operations a models, AI an customer-focused and holistic platform of who and Ovation vision across is boundless AI-ready mix organizations maintenance generative have awareness The the integration just one complex traditional offer [

power the on interactive power recently focused Our Conference and of their Ovation emerging technical Users plans. exhibits, Pennsylvania, Group provide U.S. industries. business as customer on in technology direct utilities focused multi-day conference studies XX% participating held product users inform helps case with event sessions and water topics. a featured Users for XXth Pittsburgh, business This and world-class engagement which industry potential collaborative input our creates development a Ovation enhancements, product strategic in

the took the remaining equity interest August definitive in while also on closed simplification Private key with we pay sellers journey Copeland transaction proceeds the agreement funds sell announced to [indiscernible]. We cash our joint by the as QX purchase a involving Blackstone repurchased our transformation to The $X.X debt. managed will forward and be step in equity a in pretax Copeland receivable venture. X, will billion, stake, used which and of note down Copeland

through to that, Mike by over equity detail. in the the more financial to Baughman expect our August. With turn end the of We I'll portion walk call close to now results

Michael Baughman

X X%, third and X and points led hybrid discrete. up Asia businesses good Underlying growth. quarter X% similar in Devices discuss regions, sales Lal, softness everyone. Price by financial growth control Thanks, and X%. grew the continued Slide Americas, turn Intelligent to morning, with up Europe partially results. X%, our the software growth of X%. to Please Middle was grew and by contributed process offset Underlying up across and X%, was and East, our while

market weakness. was metric, and AspenTech which due than sales sales, mid-single digits, were underlying stronger automation amidst expected recovery slower [ contributed lower our Test for expectations pace the net $XXX quarter. ] in a & of screen to Measurement, to at down not below included slightly continued is than the X%. The million expected, growing

QX gross of performance, benefit to XX.X%, from at slightly decreased the segment billion. Adjusted and margin strong to price/cost backlog expected, improved XX reductions. points QX $X.X exited EBITDA basis margin cost due and favorable As

margin to by control market negative Automation The conditions primarily from benefited geographic Adjusted systems we per -- last XX.X% XX% and Measurement, Measurement volume This which of EBITDA is expected, & was sequentially was a saw dilutive segment MRO. operating lower actions chart. and mix. Strong slightly adjusted margin cost earnings quarters year to software & excluding was in revenue record our Test Operating benefit record shipments XX.X% was the geographic to had $X.XX, than from depth sequential Discrete lower previous Analytical from of leverage. due margin expectations. software Measurement slower segment and continue exceeding share & the a offset in & more quarter's portion by leverage outperformance as XX%, adjusted fewer synergy high. Test compared driven that AspenTech we EBITDA was on our QX, decline. Test see to and the discuss improvement leverage, we continue business to will I and project in margin as flat quarter, high mix grew actions. higher next the of on XX.X%, took This

versus of up inventory cash margin earnings Finally, outflow working capital, by last year in quarter inclusive in $XX and free the million XX.X%, discussed million, improvements the to integration was flow anticipated we X. expectations. activities receivables. Free turn we million November. Please prior costs, capital million Slide expenditures. was flow in especially XX% driven and date, and was $XXX $XXX To of incurred the above of for cash $XXX have acquisition-related This elevated headwind and cash

higher from caused mix adjusted businesses jurisdictions. to tax especially Strong contributed in from $X.XX due toward earnings year. $X.XX skewed and higher Our a drag Corporate operations, was per our a prior rate share an the $X.XX. earnings rate increased income by software control performance

AspenTech an and lower by Measurement versus expectations expected $X.XX, the GACV outperformance $X.XX prior higher year, in higher contributed below revenue. due than Test incremental contributed & to slightly volume. driven

process on for updated stopped in approximately line weaker income which as FX. Measurement XXXX drag We we our also from X%, had it with X. Please the expected to XX%, sales offset which the a on of a growth accruing expectations approximately by May reached for and guidance, delayed our June our to to now are well and a X.X recovery to hybrid by discrete details $X.XX sell underlying perform slide agreement in QX we of & approximately with a contributing Copeland grow definitive XXXX. to businesses, growth, sales turn from to China. Reported headwind be is midpoint supported net a the when note year interest expected amid X.X points is guidance continue receivable point Fiscal Test next

and our XXs, in leverage are to leverage to We increasing expectations the operating mid- through QX. X the performance high strong expected leverage months driven by first strong the

our Measurement adjusted We $X.XX to & profitability $X.XX a very are volume are strong Measurement $X.XX. Test initially planned. so midpoint Test & impact helping raising expect the to $X.XX. and with now weaker contribute leverage, is of is a the actions to business expected of synergy EPS despite than environment guidance maintain

above from results the the synergy expect & points QX, their of back With XX%, approximately strong segment to couple we to EPS bringing up to year, in year, are $X.XX. $X.XX prior AspenTech's we adjusted contribution expected full realization. the For Test be EBITDA a margin Measurement's benefiting

to flow We approximately the also billion, for of and QX's Dividend we by are working and raising and $X.X expectations are tax our capital approximately million expect repurchase. rate cash now the unchanged, free expectations share performance. $XXX driven year improvements

rates interest longer, term staying QX. of we in on came focused with EUR that and XXX retired million debt higher been pay particularly short-term have due down We for debt

X and Our results. delivering through are to we performance strong has exceeded first the months excited continue expectations,

excellence. With with I'll Emerson trends. improved is over by gross portion Our to our And growth higher of margins call. the management our Q&A by secular organic profit the system that, transformed portfolio and turn call driving has driven profitability higher XX% operational driven meaningfully above

Operator

question [Operator Instructions] And Vertical first will the Sprague Jeff Research. we with have come from

Jeffrey Sprague

I Two big smaller questions, one picture, picture and one guess.

First software-defined stuff. you're picture kind of doing of idea big on and Lal, of kind the automation this Ovation. with what

integrating in say of could kind sort of whatever instrumental to of at correct that, Aspen's better you you're where change posture the also and between to that of address portfolio? across want offerings. Maybe rest assumption if kind in DeltaV of propagating I and is think technology sort collaborating, and this you that I'm

Surendralal Karsanbhai

right. hear Jeff, you. from absolutely to good No, you're

it As factors. is out certainly couple to vision, accomplish of laid that designed we a

can the inclusive being of exists AspenTech operations to of And what table to is second that the productivity, efficiency, then use first optimize liberate bring to analytic drive silos in to and analytics The the in across industry. of packages the with data in levels higher production. broad actually power efficiency much facilities safety to

exists. certainly vision that So

bring the products compute the forward released and We to those on vision. But deliver that -- the as move water to into because, step with to the serves are and first DeltaV, Edge, know, to to critical. siloed is the was critical on in have into approaches bring you out able Ovation which markets data we'll of power already was with centralized as well marketplace very the path and this capability that that continue with step exclusively industries be

Jeffrey Sprague

NI kind Great. discrete XX have on view missed And X But minutes late. near just it. when I on and your brought end is probably is was maybe the more tied the shorter-cycle year, those bit of down portfolio, I you elements which when markets. eventual of may outlook see bottoming markets. end little bottoms, and kind and start those bottoms, the or of to then just term, order look we a for to in But what into turning the you XXXX the

Surendralal Karsanbhai

certainly. Yes. No,

our but that We're discrete certainly very speaking, can cycle we well markets there, last to add expected. engaging second on marketplace Jeff, that to peers foresee in AspenTech. recovery will in year capital of and half performance. sales their slower discrete, XXXX. Test be that strong with profits as the into momentum be, lastly, carefully in in And just of with will of the So turning of our customers in us see on get believe offsetting here Measurement, orders very I'll a close slower. positive first to quarter the to we than path is we [ recovery the also has We're lot We here cycle at some half start comparisons. of based XXXX in that that positive been hybrid the positive cycle But orders ] with there formation them. a & watching little then the watching course, XXXX. And a the what turning on what continues and weak

And so how those and thinking. believe range that within on we we're of I the expectations, that through-the-cycle start will think that. end about offset a given we're of that bit to little XXXX guide towards as we've be probably but Certainly, our that lower we

Operator

Nigel Wolfe Coe have we Research. Next, with

Nigel Coe

$X.X Just Measurement billion want to billion $X.XX Jeff for question in on pick there. range the to obviously XQ up quite wide. Test last is from The &

to given we I that think that seems range. growth half of It just of until that towards expectation year. we're the the lower end the the don't second tracking revenue get

was Just make sure correct. wanted to that

Surendralal Karsanbhai

at a it about because to to it. we can think best still this wouldn't point some that in feel have point. the up range we Obviously, that at This midpoint is write management how we you end can can I don't is team. within as guide, of got the -- the guide We commit the confidence we low certainly hit that Nigel. it

Nigel Coe

of feels again a zooming uncertainty, there. seen some of projects markets, deterioration out Okay. the [indiscernible] just sort Obviously, environment in rates. a maybe industrial of delayed to general some on Great. the with And are higher like comment sort of kind we've out

market customers? of terms Maybe overview the wondering, out there end give obviously, bit you're funnel vibrant. just an seeing what overview. And in Just an of very a remains more from us

it to you Q-over-Q. Are But what of decision-making? see So starting about slightly to order funnel longer this kind increased process? conversion

Surendralal Karsanbhai

Yes. Thanks, Nigel. Yes, I'll comment.

you historically little bit that that as course, million as a market booked in been the approximately timing, in a with quarterly well $XXX deck. did you and an basis, equal we Of grow, We mix on end booking the funnel noted. shared depending we've value. changes The on amount

seen to journey cycle of East haven't capital the I a manner. formation the eliminated as continue look Middle positive projects this or expansion at we slowdown projects So the -- of being the funnel in -- and the particularly haven't I and in the it the any or Africa. seen degradation LNG, sustainability relates I projects to

there. very I'm optimistic So still

to But projects other watching our around -- accept which have what carefully. that that very have some Now there of carefully, that whether watching and implemented sales, delays our experienced that obviously of that are the which we our quarter, inspections there's and being we do watching areas, some end the lower customers which in carefully of contributed been we the versus that expectation. at guide low willing versus very going we're obviously the -- are pace booked, is X% are we're products, to on, that are very

Michael Baughman

out, And talked would leverage get I a comments We Nigel, just projects are did little quarter. some of margin. that add this subtraction some those pushed to by the in was through about in addition lower projects generally because read that which that, the

of it was in So the the quarter. XX% part

Surendralal Karsanbhai

the And important still that's recognize. a to hybrid mid-single good orders digits, to are very process Nigel, lastly, That's question. our of course, and and up point.

Operator

Melius Research. with Davis Scott have we next, And

Scott Davis

this like want really are that. it still guess focus my more point, is, feel like on have to Kind is, Congrats -- Once you mean, but of on get on in a capacity to to kind to fair M&A? you here. good from Or you amount feel guess I the explicitly you do leverage. Do I done, digesting hand. NATI seem mean proceeds, question choppiness thing you I with curious, of plan a what I the of have a we at through Copeland navigating do the this do you're you do cash going on spot

Surendralal Karsanbhai

And do I that's I important. sheet what we have feel the in balance great about to terms our of Yes. think investment No, very certainly, grade. and maintaining

set said about integrate It's drive the markets I to And to will that, that team good progress through make. -- continues really We you what differentiation National feel all be something of AspenTech. that company. And move like know and a having that continue know, time Instruments that's and we right work. that very feel we in would for good. But terms cycle majority if in wish sheet working will that's to and the have that, Scott, growth the very of we we that, our to position balance the capacity, are own hard we will the think put to as the that evaluate

Scott Davis

enough. because Jeff's a And Fair on Okay. then line. question it -- put slide, I it's wanted on to on you a follow up and it's product think Ovation I not

where came this use? Is is said, a of that the event hit change, more Any us big historically, like iteration? I base step past. upgrade? deal the expect sort they would just that of think percentage kind lot, a -- that of And to of Or to what kind step you your where the talked think think to installed like there word this way about point is you of you there installed about way a to some impact on be to iteration for about tipping guys you powerful it change, you than would is in hit maybe of tangibly XX% even people right meaningful how bid did it is generally have X.X so And where upgrade? pretty there is a have. I helpful. color the a people your mean base the people but a

Ram Krishnan

had the releases about to And from in last And significant of a boom for the capabilities Copilots think we power optimization vector an our Ovation and very call, this that tipping and it the significant of just existing investment talked perspective, the of is point. over well Aspen and And innovation analytics -- capability infrastructure Yes. to time. very we a globally earnings frankly, the at that in go perspective, positions important it and and from the is very, from to one, systems I certainly we've or X.X continued renewables, we've as with generation From a from perspective, technology also fundamentally significant in greenfield, not the lifetime a lot an plants, investments power upgrade provides terms given centers, country in but have which distribution and that incorporates certainly be technology Ovation expect is given before. And we this fact an us. that growth on power X.X. transmission in opportunity well the data have us AI as modernizations capacity. And extensions generation the and in that of new in capabilities in in

So what really we're excited about. very that's

Surendralal Karsanbhai

And that question, records elements for and the activity, of core growth but change step marketplace. And the the that are purposes critical. highlighting across in seen AI our we've innovation, how think then I that. new in to think businesses. around on And taking of maintenance lands this here planning probability higher is plant. lastly, And a talked that's and maintenance, as use innovation Scott, in I pathway innovation your give it different accelerated -- will we we've to assets that the enable differentiated a you're Scott, incrementally past needed which the we're most the models, Emerson, will down turnaround the at going actually drive on work is

You see that. that one up, in have a that of spend as percent report then element we we R&D sales, an results the this is of and as stepped of

Operator

Dray RBC And of next, have Capital. we Deane

Deane Dray

I the with of what Page overlap you're projects, projects $X count the much those? I'd XXX like kind to over back to go much visibility mega ask guess or whether do latest does billion. overlay And seeing you How is and X demand to have? funnel this

Ram Krishnan

you reference the -- quite sure not the projects clarify Dean, you So referenced? in I'm terms of you made can mega

Deane Dray

to billion, encompasses a they actually been has focus America. and it's projects. Non-res us all it at and these looking at industrials it's This how translating everything past look batteries. Yes. the North But are software big -- secular the projects construction $X drivers from for into for over year just a across way to

become this So using benchmark it's indicator we're now. that

asking. I'm reason the that's so And

funnel, maybe so-called with a but this get have -- overlap mega America, that global how it's North for do projects at or looking have much you funnel, You're these it, information? I within you

Ram Krishnan

funnel go and our project but remains large what -- and in with will it get that every in activity North tell on are I action America of Colleen of of participating is, also but work certainly Yes, America, of in quarter. what you map take We'll good all will North life Control projects map energy, Power and Life it's and in and we'll in level frankly, we participation and sciences EVs, and you and solid, have those back LNG, terms very, And in that, are win projects the and of away with back particularly our map. But Systems very an current terms go very terms one rates. North with business those in our tell good referencing, in map the that but we the Sciences of we America. you're semiconductors in a in even activity own project very had I we'll

Colleen Mettler

universe. of funnel represents our a the content And out project what is as a versus automation reminder, there that in the entirety

keep to also in that's So mind.

Deane Dray

course. Of right. All

a second of bit cash. forward follow-up that. on balance the So we'll is question be sheet Scott then and looking And the from to a

from the be fungible cash to directionally back the talk know your you just is away note. can to But buying buybacks. pulling of Just use buybacks? I you that and was in capital Copeland all decrease said

maybe I 'XX, it's do fit talk -- to where priorities? buybacks your in know Just just but about early

Michael Baughman

along with are and Yes, definitely it's to generally. in dividend Dean, returning still the capital shareholders Mike. the buybacks priority

same. remain billion paper our We allocation capital of cash paid exit the with $X.X-plus off will balance the will commercial year the the on and sheet. But

continue will to course, bolt-on and Will improves be then, And to organic committed the to M&A on initiatives. We be of be our share -- focus dividend continue buybacks. that portfolio. the growth funding there'll

which yes, So roughly continue the $XXX year at, be in this a buyback. million, think, we million $XXX with us quarter will We'll share gets market to that back pace. roughly we

Operator

JPMorgan. Steve have Tusa Next, we of

C. Stephen Tusa

next I year. talk And Typically, do a Could aside. Aspen it seasonality fourth raising think how and then of think underlying strong the cash XQ historically. guess, have about putting quarter you into the just this flow you're in I about year? cash your we pretty you like

Ram Krishnan

Yes.

up to million fourth quarter took coming quarter, we fourth seeing through reasonably which the and So in would ] which the $XXX increase. consistent, think [ $X.X I about billion a guide imply is

particularly for sheet, had third Test did this in and & which quarter there, this off they year. about $XX Measurement was good. balance the numbers remember, has the which million quarter that And So great skew a field

prior and about good feel $XXX pretty billion at it the we looking with for the looks some million, the ] $X.X line So in of years. year the [

C. Stephen Tusa

know out that normal looking the next year, of should more that's of? anything aware today, just outside dynamics whether then bonus anything operating merit mechanical that in the of leverage or kind that's And you increases, be payments bridge to it's we

Michael Baughman

kind of run in think that would at a largely of can't But looking the headwind. offset tailwind anything the are headwind and I a will and business. slight say we at corporate, I be a

given Those just interest expense expense, accounting in overall lower in. pension And all two the the way proceeds come because more the expense a works. Copeland increase will we'll yes. cash, lower equal, with then have have interest of things that We an deferral

to So net at corporate. that should small a headwind pretty

C. Stephen Tusa

Okay. the And What are you for Aspen? move last quick guys. year? one one guys on Are plans to you that planning this then for

Surendralal Karsanbhai

as this time said, through here. fiscal, evaluate, we go we'll I to Not Steve, in as continue

C. Stephen Tusa

sorry, meant thinking 'XX. -- on I I the meant already fiscal already I'm Sorry, about next 'XX. I'm year.

forward-looking. -- Sorry

Surendralal Karsanbhai

there. comment No

Operator

we Kaplowitz of have Next, Andy Citigroup.

Andrew Kaplowitz

your year you your maybe for a chain raised bit supply to help, to in is We obviously, is to less for FY last fading as to leverage maybe the Investor us are you gave operating continued Day. a help algorithm has than at wins high know price XXs, likely this Emerson Well, impressive. which And higher guidance be mid- 'XX.

see you think answered you just from in sustain sort what 'XX I can incrementals and but the in of about XXs Steve's takes, today? other question puts you

Surendralal Karsanbhai

Yes. we Thanks the question. believe for We can.

plus higher point the We of be today is similar will year. move think year I margin XX% leverage with have Emerson transformation to certainly very next GP to over that portfolio. a expectation And this significantly rates of X,XXX portfolio our a the basis

Andrew Kaplowitz

you initial do mentioned end to X% cycle growth Great. [indiscernible]? the an visibility X% then, I low kind as what in revenue 'XX. to of think, And due while see that read have of growth I decent you need to guess FY towards, the your to you achieve

Surendralal Karsanbhai

Ram. ahead, go Yes,

Ram Krishnan

Yes.

the we're and is second rates points half will mean, of I the generate end of low right on now seeing that obviously, what the So based year that this to order to the X%. X%

change now hybrid of of really capital mid-single X North then have rates of to recovery focused is Now on the amplitude KOB China. American we're is to the The not strong. concerned And really continues obviously, or and something business remains the we're We're cycle the discrete the or pace watching. business order has digits. still pace areas what recovery, of

in of really second of single-digit to we've feel that come So China pace in how we good going we off the is into next order recovery amplitude year low about. It's XXXX. guide that as dictate and we the discrete seen half growth very

Andrew Kaplowitz

worse? is seeing China... Well, stable What's it are China low you Or at getting levels?

Surendralal Karsanbhai

I'd suggest stable, Andy, at this point.

Operator

Julian Barclays. we Mitchell Next, of have

Julian Mitchell

market. wanted Maybe on around weaker an those the energy the to tied as and peer do in some verticals? transition types They suppose automation? Was miss chemicals solely ago. to hour of automation verticals Because slight weaker I weakness where just to QX. about referred talk I and listening end in last Aspen spend an process CapEx, orders and to mining night guide Because was discrete sales I different that the lowered start suppose well. half

to there? trying just versus of So sort element outlook that discrete process the of understand

Surendralal Karsanbhai

broad as and have Europe in and the a cycle highlighted relatively so won. that life wins, color America. And Middle $XXX haven't mining. I specific I few Yes. I into it power -- that those as United don't we there generation, Certainly, some from his well transition, we from to No, answer see here, And capital particularly and sciences, strong let relates to Western energy I'll through add that continue metals formation and is Ram perspective. -- around -- a I are but bucket of States East We others markets. million today concern Latin lot whole

in So Ram? digit which company quarter. the low mid-single-digit the discrete process negative automation by quarter, discrete for in and orders, in growth the to the remains order business the single hybrid impacted

Ram Krishnan

player But big continues good. some in in to said cap wins hybrid Certainly, our Power, business a of markets driving I majority Life could is Sciences and the a it. which for not very momentum mean well Energy, be the our are capital think beverage, slowdown. in as you I process Life food business. Yes, terms hybrid our project like as us, the we dynamic be of you're referencing Sciences

to and Our be metals very continues good. business mining

not automation and kind impact in area. But we're discrete seeing pace is semiconductors our slowdown slowdown, as watching which I no our broader that any of markets automotive, carefully, the discrete which EVs of also but very we're like area markets like So the referenced, particularly impact NI, business. recovery,

one segment defense, spending. Measurement, we've overall where of driven by It's of XX% mix. momentum aerospace & government seen the good Test their Now and is

So that North in certainly recoveries are come sustained see we're and yet semis are out which that's America. watching growth markets to strong, and we closely. But driven in EVs,

Julian Mitchell

little you backlog, 'XX? on in about feel where December much around was as down anything growth of a I about your backlog you little that sequentially. $X.X I year sort as else. my it's moving as still June, at that the think backlog, down And a billion just factors think intra it well. When decent if from of follow-up bit sort look then confident of seasonal Do and somewhat as related. bit at you end But so And was its fiscal enter

Ram Krishnan

in million, all That we $XXX and us, backlog measurement. reduction do. Yes, it was about test for frankly,

business in backlog flat. the effectively held base Our Emerson

we enter see be backlog in XXXX. about levels up year-over-year, typically we and good it as backlog QX, a feel pretty reduction we Now but will

Michael Baughman

actually the had in order above Record book-to-bill X. the would control I quarter, levels. the earlier the add Interestingly, And a to comment formation, about capital systems business

Surendralal Karsanbhai

we bill. Emerson for full X, book the expect right year, to for around And

Operator

Brett have we Next, of Mizuho. Linzey

Brett Linzey

Just wanted around of amplitude pace to comments the the the come recovery. and back to discrete

that leverage there? about the framework should and above the of As the back, you've we actions XX% business given of think some containment comes cost the operating taken some

Ram Krishnan

that's markets be GPs would to business, say other test I will XX-plus percent around for in the Yes. will that discrete the and it be our Certainly, much discrete given measurement, XXs. higher. right exposed automation business end the

Brett Linzey

And it. then power Got Okay. generation. on just

in So you've talked momentum of that about business. some there the

grid there? funnel look I think some you're activity through Aspen how the tracked update on pretty the working on quarter encouraging. results and the of that the at and strategic Any

Ram Krishnan

capital transmission formation mean, I I think modernization, our the clearly referenced is in grid -- Yes. so investments. which Aspen distribution fundamentally and

side T&D Aspen. through at OSI the to is exposure our So

interestingly. a year build project to generation On very, continues China side, funnel business, strong that but the the also North having both is we're Europe, in very America, power which in Ovation

activity So is we're likes that the the with driving renewable robust invested and positioned to as continues the innovation of is overall, be being robust. globe Ovation in capacity X.X, for generation investments, that Green that is as well across very Ovation the our there the

and renewable that Ovation an of project just I that's the very in strategic with India example one While referenced of in space happening in a involved is platform. activities the types with the we're India investment

Operator

of Oppenheimer. Glynn Christopher have we Next,

Christopher Glynn

if specifically if what I But any that customer had you're an inventory it. sizes quarter, of a you're in some lot of if I wondering catch Or if maybe the question mainly on if performed accelerated in the are that from years? MRO. MRO side? markets seeing how sorry on prior there's Curious didn't rebalancing, -- impact some the seeing

Surendralal Karsanbhai

MRO a quarter. quarter. America MRO certainly, our Yes. This in European the very expectation for there I said call, the which well is totality, was -- all. a within lot. MRO and discussed in the the is we've strong consistent flows, really It year. Having in change didn't North of in with softer that, ebbs and as the at was the where relatively on whole few revenue quarter been XX% I remains were

customer a or seen haven't alarming is We that company driven from a level in any way. there anything inventory distribution not heavy We're perspective.

operation into thereafter. equipment generally and shortly put Our is bought

alarming characterized so weakness or softness for nothing and America MRO. And in Europe, in MRO in America North North the on side. But the quarter consequently, again, strength

Michael Baughman

Yes.

the reverse there strength, The that of in quarter. nothing North little that bit Just talked recalling on American about as little said, to softness, a & a quarters, But Measurement some particularly the concerning. how, bit. was and we saw we had Analytical Lal build in prior business,

Operator

Nicole Next, have Bank. Deutsche we DeBlase of

Nicole DeBlase

more is going like you there? Are just synergies actually on T&M the business, faster planned. guys And it sounds a expected? is about 'XX? in Maybe guidance through thoughts like bit progress updated the any timing, better synergy with than Or coming fiscal raising it maybe the synergy than

Surendralal Karsanbhai

raised we quarters Look, No. guide few ago. a the

execute that across continue to We pace.

results. So no are change to to we to the but certainly guide pace be these the maintaining deliver synergy able

Nicole DeBlase

question. possible more And could X lot a a it turn detailed half do at if that's then you do it. that, in positive? more Or event a think Is little bit discrete you quarter? a bit Got revenue fourth of organic [ could detail a the that Okay. easier comps, -- this The ] ask get I of automation XX point?

Surendralal Karsanbhai

Go ahead, Ram.

Ram Krishnan

think positive Yes, it's a ] turned on point, recovery XX we're in 'XX the for a X sales [ first QX. this in I planning orders half half business. discrete automation At

Operator

and today, thank you, for concludes the and At management question-and-answer a session day, I all lines. Thank have great for would everyone. disconnect you time, attending and this may team to you our like today's their event. Well, presentation. your today's time this thank

Emerson Electric (EMR) 7 Aug 242024 Q3 Earnings call transcript